Prediction of Financial Distress among Swedish Listed Companies - A Study of Ohlson's O-score and an alteration of the model using Swedish data

Abstract: The prediction of bankruptcy and financial distress related to companies has interested many researchers and two of the more notable published contributions are attributable to Altman (1968) and Ohlson (1980). As the studies within this field of research are many, few can be been related to Swedish listed companies. This thesis mimics the research done by Ohlson in the pursuit of trying to find a model suitable for the Swedish stock market, with a starting point in the studies of the same. By comparing the results of three different models derived through logistic regression analysis, Ohlson's model still seems to provide some usable input. However, the results indicate that a revised model, incorporating information related to the audit report and the opinion expressed by the auditor, improves the prediction of financial distress among Swedish listed companies. We found this model, Model B, to be the most suitable one amongst the three.